Comment Text:
Adam Barrick, Kalshi's Head of Sports Partnerships, recently filed a comment urging the Commission to greenlight player-performance event contracts. I read it carefully. It is a polished, well-lawyered document — and nearly every argument in it falls apart the moment you look past the language.
I want to explain why point by point:
1. The "Commercial Hedging" Argument Is a Dressed-Up Pretext
Mr. Barrick's most elaborate argument is that player-performance contracts serve a genuine hedging function for brands, DFS operators, sportsbooks, and broadcasters with dollar-denominated exposure to athlete performance. The Commission should examine this argument with the skepticism it deserves.
First, the argument proves too much. By this logic, virtually any binary wager on any commercially consequential event could be reframed as a hedging instrument. A contract on whether a named celebrity posts on Instagram today has "commercial consequences" for influencer marketing agencies. A contract on whether it rains in Dallas on Sunday has consequences for stadium concession operators. The CEA's hedging rationale requires more than the existence of some economic actor somewhere who bears correlated risk. It requires that the market actually functions as a hedge — that commercial entities with genuine exposure use it for that purpose in meaningful volume.
Mr. Barrick provides zero evidence that Nike, DraftKings, ESPN, or any other entity in his described "commercial value chain" has expressed any intention to use CFTC-regulated player-performance contracts for hedging. He cites their exposures in detail. He cites no hedging demand whatsoever. That omission is not accidental. It is because the hedging argument is theoretical scaffolding constructed to satisfy the Commission's legal standard — not a description of why these markets would actually be used.
Second, Mr. Barrick's own revenue figures expose the argument. Sports betting constitutes more than 90% of activity on Kalshi's site and 89% of its revenue. If commercial hedgers were the primary constituency for these contracts, they would represent a meaningful share of volume. They do not and will not. The overwhelming users of player-performance contracts on a Kalshi DCM will be retail sports bettors — the same population currently using DraftKings and FanDuel — not risk managers at Nike laying off endorsement exposure. The Commission should not grant regulatory legitimacy to a retail gambling product based on a hedging rationale that will account for a rounding error of actual usage. Wikipedia
2. The "DCMs Are Better Than Sportsbooks" Argument Proves the Wrong Thing
Mr. Barrick argues at length that a CFTC-regulated DCM would produce superior price discovery and surveillance compared to fragmented state sportsbook markets. Even accepting this entirely, it proves only that a regulated gambling market is better than an unregulated one — not that the CFTC is the appropriate regulator, and not that Kalshi deserves a DCM designation to offer these products.
This argument structure — "Americans are already gambling on this, so the Commission should embrace its jurisdiction and regulate it properly" — is a blank check that would justify bringing literally any widespread illegal activity under federal commodity regulation. It is not a public interest argument. It is a market-capture argument dressed in regulatory language.
Furthermore, the comparison to sportsbooks is self-serving in a precise way: Kalshi designed its product to mimic sportsbooks closely enough to attract sportsbook customers, while distinguishing itself just enough from sportsbooks to argue it falls under CFTC jurisdiction rather than state gambling law. Having engineered that ambiguity, Kalshi now argues the Commission should resolve it in Kalshi's favor because Kalshi's version of the product is marginally better regulated than the sportsbook version. The Commission should not reward that regulatory arbitrage strategy.
3. The Manipulation Argument Gets the Risk Backwards
Mr. Barrick argues that player-performance contracts are less susceptible to manipulation than critics claim, because suspicious activity is detectable on centralized, surveilled markets. This argument, while superficially appealing, fundamentally mischaracterizes the nature of the manipulation risk.
The manipulation risk in player-performance markets is not primarily that bad actors will exploit fragmented surveillance across 30 state platforms. It is that the existence of large, liquid financial markets in individual player statistics creates direct financial incentives for players, coaches, trainers, team staff, and their associates to influence those statistics. A player who knows a large position has been taken against his receiving yards total has a financial incentive — transmitted through any number of intermediaries — to underperform. A trainer with advance knowledge of an undisclosed injury has a financial incentive to trade before that information becomes public.
Mr. Barrick cites Sportradar's detection of 1,212 suspicious matches globally in 2022 as evidence that surveillance works. The Commission should read that figure differently: those are 1,212 instances of detected manipulation in a global market that already has substantial surveillance infrastructure. Scaling liquid, retail-accessible player-performance derivative markets to national volume in the United States will not reduce that number. It will increase the financial stakes that make manipulation worthwhile and expand the population of people with both the access and the incentive to engage in it.
The core principle 3 standard — that DCMs may list only contracts "not readily susceptible to manipulation" — exists precisely for this situation. A contract whose outcome can be directly influenced by the humans performing the underlying activity is the definition of readily susceptible to manipulation. Mr. Barrick's surveillance proposal is an argument for why manipulation might be detected after the fact. It is not an argument that these contracts are not readily susceptible to it in the first place.
4. The "Status Quo" Framing Is Deliberately Misleading
Mr. Barrick repeatedly argues that "the choice presented to the Commission" is not whether Americans will speculate on player performance but whether that activity will occur on regulated or unregulated platforms. This framing is designed to make rejection of Kalshi's proposal appear irrational — as if the Commission's only options are Kalshi's DCM or offshore chaos.
This is false. The actual status quo includes 30-plus state-licensed sportsbook platforms operating under comprehensive consumer protection frameworks — age verification, responsible gambling tools, advertising restrictions, addiction treatment funding, and independent regulatory oversight. These are not "fragmented, vig-distorted, restriction-laden" failures, as Mr. Barrick characterizes them. They are consumer protection regimes that democratic majorities in those states chose to enact as the price of legalization.
Kalshi's proposal would replace that framework — imperfect as it is — with a federal commodity exchange designation that carries none of those consumer protections and preempts the state frameworks that do. Mr. Barrick frames this as regulatory improvement. It is the opposite. It is the elimination of consumer protection infrastructure that took years to build, in exchange for a DCM designation whose core-principles framework was designed for institutional commodity markets, not retail sports bettors.
5. The Source of This Comment Matters
The Commission should note that Mr. Barrick is Kalshi's Head of Sports Partnerships — a person whose professional role is to expand Kalshi's sports betting business. His comment is not independent academic or industry analysis. It is a legal brief filed by a regulated entity seeking to expand its own regulatory authorization, written by an employee whose compensation depends on that expansion succeeding.
This is the same company that emailed its entire user base soliciting pro-prediction market comments to the Commission and built an AI tool at comments-campaign.kalshi.com to generate those comments at scale — a tool that, by its own description, produces only comments supporting "well-regulated prediction markets" and offers no mechanism for users to express concern or opposition. The Commission should weigh Mr. Barrick's advocacy in that context: it is one component of a coordinated campaign by a regulated entity to influence its own regulator, not a disinterested contribution to the public record.
6. Final Thoughts
Mr. Barrick's comment is, at its core, a request for the Commission to grant a gambling company a federal license to offer retail sports betting products nationally, free of state consumer protection requirements, on the basis of a hedging rationale supported by no evidence of actual hedging demand and a manipulation-resistance argument that describes detection rather than prevention.
The Commission should deny that request. Player-performance event contracts are sports bets. The appropriate regulatory framework for sports bets is the state licensing regime that governs every other sports bet in America — not a CFTC commodity exchange designation engineered to circumvent it.
